THE MERITS OF BANKS

21

prohibition by the constitutions which some of the states adopted
during these decades.
With the very desirability of banks so moot a question, no
small part of the literature on banking was concerned with the
economic influence of the institution and its relative merits and
demerits. To this problem we now turn.

In the colonial period, we have already observed, the conception
 of a bank was quite different from that of our own time, and
this must be borne in mind in interpreting the bearing of the
colonial views concerning the utility of banks upon those of the
period in which our primary interest lies. For the most part, the
colonists meant by a bank little more than an emission of paper
money, with infrequent provision for convertibility on demand;
and less continuity can be established between their general conclusions
 as to the desirability of banks and the views of the later
writers, than between the lines of reasoning by which each arrived
at the conclusions.
The first important discussion of the merits of banks of the
modern type occurred in Pennsylvania soon after the Revolution,
when the repeal of the charter of the Bank of North America
was being considered. In 1785 a bill? was introduced to repeal
the charter which the state had granted three years before, and
a spirited controversy followed. Mathew Carey has, fortunately,
preserved for us a record of the debate in the General Assembly?
to which we have to add several pamphlets that were called
forth by the issue.
The advantages ascribed to banks in this early discussion
were chiefly that they (1) make for punctuality in payments;

1 The original constitutions of both Iowa (1846-1857) and Texas (1843),
for example, contained such clauses. Not until 1904 did Texas grant any state
charters to banks, although a loophole was found in the constitution for the practice
of private banking.
Sumner states that in 1852 banking was illegal in nine of the states and in the
District of Columbia. (History of Banking in the United States, p. 415.)
2 The bill was enacted in September of that year. In 1787 the bank, which had
continued in business in the meantime, was given a new charter.
3 Carev. Debates and Proceedings of the General Assembly (1786).